B2B Robo Advisor

  

The robots aren't coming.

They're already here.

Robo advisors are taking over the job of old-school investment advisors by helping your average Jane and John balance taxable and retirement investment portfolios. These B2C robots take into account income, risk tolerance, and time horizon, doing the math just like the human counterparts they are replacing. Black box investing (i.e. computer driven decision-making) has been around for decades in the investing world. It works great...until that one exogenous event happens that nobody thought to program into the computer. A zombie apocalypse? A meteor? The election of a reality TV star as president? What? Could happen...

Anyway, it all works, until it doesn't. And then it doesn't work...badly.

Out of B2C robo advisors came the next-gen B2B robo advisors. B2B robo advisors are programs that are incorporated into businesses to provide creepily-fast and unbiased investment strategies and stock trading for those businesses. B2B robo advisors and their trading algorithms allow businesses to pass the savings of man-hours on to their clients. Hopefully these bots don't become self-aware.

Related or Semi-related Video

Finance: What is a quant fund?0 Views

00:00

Finance a la shmoop. What is a quant fund?

00:07

Oooo, algorithms.... Say it with me people algorithm, math, black boxes, spooky [Equations flying around]

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numbers a quant fund is an investment fund

00:21

well usually hedged or with elements of hedging that relies solely on the math [Definition of a quant fund]

00:26

of everything. They don't care much that toothpaste is now being used for crow's [Man putting toothpaste of his face]

00:30

feet abatement and that there's a five-year bullish trend for Colgate they

00:34

don't care that Tesla is dominating the world with electric cars and that [Tesla logos popping up all over the world]

00:38

gasoline will likely be obsolete in a few decades and they don't care that

00:42

people are living longer so life insurance companies have a tailwind [Life insurance sail boat going fast]

00:46

behind them too because insurees will be paying those premiums 17 more months

00:51

on average in the future before they croak. Well all quant funds care about is [People handing over money before they disappear]

00:55

the math of the math, typically a quant fund builds its own proprietary complex

00:59

math laden models which automatically trigger a series of trades at any given [Equations flying around]

01:04

moment in the trading day hoping to benefit even in tiny ways from what are

01:09

essentially arbitrage opportunities or theoretically riskless trades that can [Definition of arbitrage]

01:14

be made taking advantage of mixed pricing in the market all around the

01:18

world. Quant funds as they are now classified as an alternative investment

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in the same vein as hedge funds charge the same exorbitant fee structure and [High fee structure label on quant funds]

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because they do such vast volumes of trading that is something like one-third [Stocks being moved around]

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of all u.s. stock trades now derive from quant fund managers well they give out

01:37

massive commissions and have equally massive sway with the brokerage

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community to you know say nice things about them and encourage people to talk [Newspaper article about quant funds]

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about how great quant funds are yeah and you've probably seen myriad ads on TV [Woman watching TV]

01:51

for their funds you know like this one math it does a body good.. [Dwayne Johnson on the advert]

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